Factory output declined for eighth straight month in July

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Manufacturing output once again declined in July, extending its contracting streak to eight straight months, the government reported this morning.

Preliminary results of the Philippine Statistics Authority’s (PSA) latest Monthly Integrated Survey of Selected Industries, showed factory output — as measured by the volume of production index — declined by 8.1% year on year in July, slower than June’s revised 11.6% contraction but a reversal from last year’s 10.1% growth.

Manufacturing production has been registering a decline since December 2018.

“The slowdown was mainly due to the annual decreases in six major industry groups with petroleum products and furniture and fixtures registering the highest annual decrements of 75.8% and 24.8%, respectively,” the PSA said in a statement.

In comparison, the Nikkei Philippines Manufacturing Purchasing Managers’ Index (PMI) improved that month to 52.1 compared to June’s 51.3 and July 2018’s 50.9, marking the strongest improvement in six months or the 52.3 logged in January.

A reading above 50 signals improvement in business conditions from the preceding month, while a score below that point indicates deterioration.

Average capacity utilization — the extent by which industry resources are used in the production of goods — was estimated at 84.3%. Twelve of the 20 sectors registered capacity utilization rates of at least 80%. — Mark T. Amoguis